Federal Reserve Chairman Ben Bernanke said Monday at the University of Michigan that the economy is moving in the right direction. / Dec. photo by Manuel Balce Ceneta/Associated Press

Detroit Free Press Personal Finance Columnist

Federal Reserve Chairman Ben Bernanke said reaching a fiscal cliff deal was a "good start," but he said more challenges remain in the months ahead, including addressing the debt ceiling.

"We are not out of the woods because we are approaching a number of fiscal watersheds," Bernanke said Monday at the University of Michigan in Ann Arbor.

To be sure, not dealing with the fiscal cliff in January probably would have triggered a recession this year, Bernanke said. But he noted more work must be done in Congress.

Bernanke took part in a wide-ranging conversation with Susan M. Collins, dean at the Gerald R. Ford School of Public Policy at U-M's Rackham Auditorium.

After the discussion with Collins, Bernanke addressed questions from the audience and questions received via Twitter.

When it comes to the economy, Bernanke said the Fed would obviously like the jobless rate to be lower. He noted that having 40% of the unemployed out of work six months or more is particularly troubling.

"That's a situation where there's too many people whose skills and talents are being wasted," Bernanke said.

The U.S. jobless rate has dropped to 7.8% -- and that's lower than 8.1% in August and far lower than 10% during the depths of the recession, he said. But he noted that the pace of economic growth has not been strong enough to get the jobless rate down further.

When it comes to financial challenges, Bernanke surprised some in the audience by responding to one question about issues that deserve more light by noting that Fannie Mae and Freddie Mac remain concerns.

Bernanke said more needs to be done in the area of reform regarding such government-sponsored enterprises.

When it comes to the debt ceiling, Bernanke noted that raising the debt ceiling gives the government the ability to pay its existing bills. It's not about spending more.

He tried to compare the debt ceiling debate to a family looking at a pile of credit card bills for items that were already bought. The bills have yet to be paid. But the family -- like Congress -- is trying a rather creative response.